Automated accounting system

ABSTRACT

An automated accounting system for an entity, such as an individual or business is provided in which at least one file is established for the entity and a plurality of data inputs are provided to the file. The data inputs include electronically recorded transactions made between the entity and other entities. Access is provided to the file for agents of the entity so that one of the agents can perform one or more activities related to the data inputs such as entering, deleting, reviewing, adjusting and processing.

BACKGROUND OF THE INVENTION

[0001] This invention relates to an automated accounting system, andmore particularly, to providing an automated accounting system for anentity such as an individual or a business in which a plurality of datainputs are made to a file established for the entity, the data inputsincluding electronically recorded financial transactions made betweenthe entity and other entities. Access is provided to the file for agentsof the entity being served so that one of the agents can perform one ormore activities related to the data inputs, such as entering, deleting,reviewing, adjusting and processing the data inputs.

[0002] There have been proposed a number of systems and methods in whichfinancial and business information has been computerized. My U.S. Pat.No. 5,193,055 discloses an accounting system in which a standardcategory code listing is used to code money transfer instruments, suchas checks, into a computer file. The information in that computer fileis then used to generate various accounting reports. The standardcategory codes can be personalized in order to meet the particular needsof the user. For example, job numbers can be coded on the check to trackincome and expense for individual projects.

[0003] U.S. Pat. No. 5,220,501 discloses a method and system for remotedelivery of retail banking services. A user can access an ATM (AutomaticTeller Machine) from a dedicated remote data terminal in order totransfer funds from a bank account to a third party payee. A centralcomputer receives instructions from the remote terminal and debits theuser's bank account as well as distributing the funds to payeesrequested by the user. See also U.S. Pat. No. 5,202,826.

[0004] Despite the existence of these systems, no one has conceived atotal accounting system in which users, such as businesses, individuals,merchants, financial institutions and other entities are connected intoa network where financial transaction information is captured, analyzed,reviewed, adjusted and processed and then used to generate accountingstatements.

[0005] As computer hardware technology becomes more advanced and lessexpensive, many if not most financial transactions will beelectronically recorded. For example, if a customer purchases a buildingproduct, such as a window, from a building products dealer, that salecan be electronically recorded in a ledger in the building productdealer's computer. No one, however, has conceived of a system in whichthe user and the building product dealer are connected in a network suchthat the recorded financial transaction, along with all other financialtransactions recorded in the network, could be used to generateaccounting records useful to the members of the network.

[0006] The recorded financial transactions, in order to be useful to themultitude of different users in the network, must be accessible tovarious agents. There is a need therefore for agents, such asaccountants, to have access to the recorded financial transactionsbefore, during and after the financial transaction is made. In this way,electronically recorded financial transactions can be entered, deleted,reviewed, adjusted and/or processed in order to provide the proper inputdata for the system.

[0007] After the data has been entered and reviewed, it would bedesirable for the user to be able to choose which services are requiredfrom the system. For example, an individual may only be interested inobtaining tax accounting services, whereas a business may need a morecomplete set of financial reports.

[0008] Finally, an effective system must have a funds transferclearinghouse, such as that disclosed in U.S. Pat. Nos. 5,220,501 and5,202,826.

[0009] What is needed, therefore, is a connected system (or network) ofusers, such as individuals, businesses, merchants, financialinstitutions and other entities, that can provide its users a method ofautomating the accounting of all financial transactions made by the userand other entities in the network.

SUMMARY OF THE INVENTION

[0010] An automated accounting system for an entity, such as anindividual or business is provided in which at least one file isestablished for the entity and a plurality of data inputs are providedto the file. The data inputs include electronically recordedtransactions made between the entity and other entities. Access isprovided to the file for agents of the entity so that one of the agentscan perform one or more activities such as entering, deleting,reviewing, adjusting and processing.

BRIEF DESCRIPTION OF THE DRAWINGS

[0011] A full understanding of the invention can be gained from thefollowing description of the preferred embodiment when read inconjunction with the accompanying drawings in which:

[0012] FIGS. 1-4 are flow charts showing the method and system of theinvention.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

[0013] The method and system of the invention provide an automatedaccounting system which brings together in a connected or networkfashion, all of the various entities that are involved with financialtransactions between a first entity, such as an individual or abusiness, and other entities, such as merchants, financial institutionsand the like. The financial transactions are recorded as data inputs ina file established for the first entity. The data inputs can be accessedby agents of the first entity, such as accountants, money managers andthe entity itself, in order to enter, delete, review, adjust or processthe data inputs.

[0014] The first entity can be a business or an individual. The entitybeing served will have established at a central or host computer amaster ledger that is used to receive data inputs in the form ofelectronically recorded financial transactions. It will be appreciated,however, that the central or host computer can be the individualentity's personal automatic computing device (such as a personalcomputer or a telephone computing device) which can receive the datainputs and, in the case of a personal computer, for example, process thedata inputs by using off-the-shelf accounting software. Therefore, eventhough the specification set forth herein will focus on a central orhost computer, it will be appreciated that the above mentionedalternatives of a personal or telephone computer are contemplated by theinvention.

[0015] FIGS. 1-4 show a flow chart which illustrates the invention.Referring in particular to FIG. 1, in box 20, the personal and businessaccounts resident in the master ledger in the host computer areinitialized. This may include, for example, selecting automatic codingpreferences, source inclusions, business accounting rules, reportingdetail, individual job record-keeping and interactive user authorizationregistrations. All of these selections personalize and customize themaster ledger for effective use of the invention. Also, two separatemaster ledgers can be established, for example separate cash and accrualledgers, so that desired data can be entered into these ledgers and canbe used to provide both tax preparation and cash reports.

[0016] The system then proceeds by line 21 to box 22 where the accountsas established above are assigned code numbers. A standardized accountmenu for business and personal financial transactions is most oftentimes established (see, for example, U.S. Pat. No. 5,193,055), however,establishment of subcategories of income and expense items may be maderesulting in more than one detailed subcoding schedule. Standardizedaccount formats are generally used to provide information to outsideagents, whereas the more complex subcoded detail is generally retainedby the entity using the system for internal use only.

[0017] Next, line 23 leads to box 24 where subsidiary ledgers forautomated record keeping and reporting are selected. While a masterledger is established in a central or host computer, subsidiary ledgersare established in computers, such as personal computers, at allentities with which the first entity will enter into financialtransactions. These subsidiary ledgers can be established with financialinstitutions, merchants, and other entities with which the entity beingserved will have financial transactions, including but not limited toautomated teller machines, telephonic computers, banks (for checking andsavings accounts, for example), investment/brokerage firms, merchantsand other automated systems/record keeping devices. Automatic codingdevices can be associated with these subsidiary ledgers to record andtransmit data concerning the financial transaction at the time of thefinancial transaction. The key idea is for all of these entities toelectronically record, collect, process, store and transmit allfinancial transactions by all of the entities, including the firstentity, that enter into financial transactions with that particularentity. In this way, all of the entities can be connected in a networkfashion so that accounting information can be fully and accuratelydeveloped among all of the entities. The establishment, operation andtransfer of data from the subsidiary ledger to the master ledger will bediscussed in greater detail below with respect to FIG. 2.

[0018] Referring back to FIG. 1, the subsidiary ledgers that are desiredto be included in the master ledger are selected at box 24. Even thoughevery entity with which the first entity is connected will have asubsidiary ledger, the first entity may only desire to have certain datainputs transferred from the subsidiary ledgers to the master ledgers.For example, the first entity may only want data inputs from financialinstitutions and not merchants. In this box 24, that selection can bemade.

[0019] After box 24, the system proceeds by line 25 to box 26 wherebeginning balances for income, expense, asset, bank accounts andliabilities are entered. Next, line 27 leads to box 32 where passcodesare issued to approved interactive account user(s) and agent(s). Agentscan include accountants, brokers or other financial advisors. Theaccount user(s) can include the first entity as well as authorized usersof the first entity, such as the controller or bookkeeper of a business.This access to the master ledger and subsidiary ledgers allows theagents to perform activities selected from the group consisting ofentering, deleting, reviewing, adjusting and processing data inputs inthe master ledger and subsidiary ledgers. This access allows agents toenter, delete, review, adjust and process data inputs before, during andafter a financial transaction in order to customize the transaction tomake it fit into the accounting scheme of the individual entity.

[0020] Next, line 33 leads to box 40 where the updates from thesubsidiary ledgers are entered into the master ledger. Referring now toFIG. 2, the establishment of, operation of and transfer of data from thesubsidiary ledgers will be discussed. It will be appreciated that eachof the other entities in the network will have means (usually computersand probably PC's) which will be used to electronically record, collect,process, store and transmit all financial transactions between the firstentity (and other entities) with that particular entity.

[0021] In box 100, the accounts are initialized in the subsidiary ledgercomputer. This step is similar to the initialization step in box 20 ofFIG. 1. Next, line 101 leads to box 102 where the personal/business codenumbers for transaction recording are assigned also similarly to box 22in FIG. 1. In addition, individual job accounting (receipting andcosting) may be automatically facilitated by an alphanumeric identifierat the point of entry. Vendors and payees may be listed by category forautomatic ledger entry and coding.

[0022] Line 103 then leads to box 104 where the ledger data processingand transfer options are selected. For example, automatic codes and/orinstructions are entered into ATM's, point-of-purchase machines, checkreading equipment or other systems where the subsidiary ledger ismaintained. These codes can identify methods for funds transfer andaccounting for each of the subsidiary ledgers. For example, creditbalances may be maintained automatically by account until requests forfunds transfer are answered with remittance. If no payment is madewithin a predetermined time, balances are added to personal companypayables and receivable lists either automatically or by command.

[0023] After this, line 105 leads to box 106 where communication linkswith the master ledger and external sources are established. It will beappreciated that although agents have access to both the master andsubsidiary ledgers, the access can be restricted by institutingpredefined communication rules. However, transmittal of transactionrecords and account balances are made routinely from the subsidiaryledger to the master ledger as will be described below. Line 107 leadsto box 108 where the beginning balances for income/expense and assetcategories are entered.

[0024] Next, line 109 leads to box 110 where passcodes are issued toapproved agents. In order to ensure access to the subsidiary ledger bythe first entity and agents of the entity being served, passcodes areissued to the approved interactive account user(s) including agents ofthe entity being served at box 110.

[0025] The system then proceeds by line 111 to box 112 where thefinancial transactions by account are recorded to the subsidiary ledger.For example, in the case of a merchant, the first entity may buy an itemand this financial transaction will be recorded. Check imaging equipmentmay be designed to read check face information including coding forautomatic entry into subsidiary ledgers for financial transactionsbetween the entity and other entities. Similarly, a 4-5 digit codingsequence may be installed in ATM transaction files for users to identifysources and uses of funds. Credit card transactions, however, willlikely require the entry at the point-of-purchase of appropriate codinginformation.

[0026] Line 113 then leads to decision box 130 where the entry is thenreviewed as to whether it is valid or not. If not valid, line 131 leadsto box 132 where an error statement is printed. After this, line 137leads to decision box 140 where a decision must be made to return topasscode entry by line 141 or by line 143 to exit the ledger routine144.

[0027] If the entry is valid, line 151 leads to decision box 152 wherethe instruction is reviewed for validity. Validity is determined bycomparing amounts, codes, vendors and payees with those preestablishedcoding and decision rules elected in boxes 22, 24 and 102, 104. Invalidentries are recorded separately for security reasons. Valid entries areincluded in subsidiary and master ledger calculations. Morespecifically, if the instruction is not valid, line 153 leads to box 132and the same procedure as was discussed above is repeated. If theinstruction is valid, line 155 leads to box 160 where the subsidiaryledger balances for external review and reporting are accumulated.

[0028] The system then proceeds by line 161 to box 170 where theperiodic transfer of data inputs from the subsidiary ledger to themaster ledger is set forth. This can be accomplished by a modem, orother data transfer equipment. This is shown by line 171 which goes toline 33 of FIG. 1.

[0029] Referring back to FIG. 1, the data inputs from the subsidiaryledgers are transferred to the master ledger. Line 41 then leads to box44 where the access to the data inputs in the master ledger is setforth. This access can be provided to interactive users and agents ofthe first entity. At this box 44, change orders, recording instructionadjustments, manual transactions and the like can be entered by theagents or the interactive users.

[0030] After this, line 51 leads to decision box 52 where the validityof the entry is determined. If the entry is not valid, line 53 leads tobox 54 where an error statement is printed. Once the error statement isprinted, the method returns to box 44 by line 61. If the entry is valid,line 63 leads to decision box 64 where the validity of the instructionis determined. Validity is determined by whether the passcode matchesthe predesignated list of approved passcodes and whether the entry iscomplete in form and substance. For example, if either the form orsubstance of the attempted entry is dissimilar with past transactionrecords for that user, a request for further information will beinitiated. If the instruction is not valid, line 67 leads to box 54where an error statement is printed. If the instruction is valid, thenline 69 leads to decision box 70.

[0031] In decision box 70, the user is asked whether the funds transferfacility is needed. If the funds transfer facility is not needed, line75 leads to the accounting statement module shown in FIG. 3. If thefunds transfer facility is needed, line 81 leads to the network transferfacility shown in FIG. 4.

[0032] Referring now more particularly to FIG. 3, line 75 leads to adecision box 200 in which the user is asked whether accounting routinesare needed. If not, line 201 leads back to line 61 (FIG. 1). If theaccounting subroutine is desired, line 203 leads to box 204 where thefiles are updated according to the entity's report selections. If simplecash accounting routines have been selected, then only those accountingsubroutines will be effected. If tax preparation reports are requested,then all accounting subroutines necessary to complete those tax reportsare effected. After this line 207 leads to box 210 where the accountingsequences for future processing are completed. For example, daily,weekly, monthly and annual reports, including statistical comparisonsfor this and other uses, may then be printed at the user's option.Subroutines for each option permit users to personalize individual andbusiness record keeping and reporting.

[0033] Line 211 then leads to box 214 where accounting subroutinesselected by the first entity are utilized. In this way, the first entitycan select one or more or all of the available accounting statementsdesired. For example, an individual may be only interested in obtainingtax preparation documents, whereas a business may desire a full set offinancial documents, including balance sheets and income statements.Thus, the system is truly a self service system in that the first entitycan select the desired accounting reports from a large menu of availablereports. The pricing of the system can be tailored to this choice. Forexample, a first entity needing only two reports would pay less for useof the system than a user needing ten reports.

[0034] After this, line 215 leads to a decision box 216 where accountstatement files are determined to be balanced or not. If not, line 221leads to box 222 where an error statement is printed. If the accountstatements are in balance, line 225 leads out of box 216. Line 227 leadsout of box 222 after the error statement is printed in order to joinline 225. The error statement will direct the entity (or agent) to makeappropriate adjustments to coded transactions which result in balancedaccounts in both subsidiary and master ledgers.

[0035] After this, the ordered reports are transmitted to the entitybeing served at box 290. Ten separate reports are shown in box 240. Thereports can be electronically mailed or hard copies can be produced andforwarded to the user by telefax, messenger, overnight courier or firstclass mail. The advantage of the system is that these reports can beprocessed faster than currently available services.

[0036] After this, line 261 leads to a box 262 which asks for the nextaccount to be processed.

[0037] If the funds transfer facility is needed, line 81 leads todecision box 300 where it is asked whether an instruction to transferfunds is desired. The funds transfer facility allows automatic(electronic) transfer of funds/payments by and between the entity'saccounts (banks, for example), as instructed. Access to any and allpayment clearinghouses is anticipated along with the funds transferfacility. Line 301 leads to box 302 where account no. 1 (that of themerchant, for example) is debited with the funds and then by line 303 tobox 304 where account no. 2 (that of the entity being served) iscredited. If desired, credit balances may be maintained automatically byaccount until requests for funds transfers are answered with remittance.If no payment is made within a predetermined time, balances are added tocompany and payables and receivables lists either automatically or bycommand. After this, line 305 leads to box 306 where the nextinstruction is requested and then by line 307 back to box 300 to startthe process again.

[0038] If a transfer funds instruction is not requested, line 311 leadsto decision box 312 where the user is asked whether there is aninstruction to transfer data. For example, an entity may elect totransfer vital operating statistics to a banker for loan monitoringpurposes. Suppliers of material can ship replacement inventory quicklyand accurately with current sales history and inventory replenishmentrequirements transmittals. Finally, payroll statistics are often timesrequired to be provided by the entity to government agencies, healthproviders, labor unions, and the like. If so, line 313 leads to box 314where the data is transmitted and then by line 315 to box 316 where thedate, time, records sent, transfer name and address are recorded. Afterthis, line 317 leads to box 306 where the next instruction is requested.

[0039] If a transfer data instruction is not requested, line 321 leadsto decision box 322 where the user is asked whether there is aninstruction to adjust current records. Entities or agents can entercoded records of financial transactions or adjust current accountrecords when certain transactions have not been automatically recordedby the system and when errors in previous entries have occurred. If so,line 323 leads to box 324 where the records are adjusted for currentaction and then by line 325 to box 326 where the date, time, recordssent, and transfer authorization are recorded. After this, line 327leads to box 306 where the next instruction is requested.

[0040] If an adjust current records instruction is not requested, line331 leads to decision box 332 where the user is asked whether there isan instruction to adjust future action. Periodically, entities and usersmust change decision rules previously entered into the system.Adjustments in system recording or reporting may stem from changes ingenerally accepted accounting principles, reporting period changes,depreciation adjustments, income or expense category additions ordeletions, cash versus accrual interpretations, statistical comparisondefinitions and the like. Line 333 leads to box 334 where theinstructions are adjusted for future action. After this, line 335 leadsto box 336 where the date, time, records sent and transfer authorizationare recorded. After this, line 337 leads back to box 300 at thebeginning of the network transfer facility module.

[0041] If an adjust future action instruction is not requested, line 351leads to decision box 352 where the user is asked whether this is afinal instruction. If not, line 353 leads to box 354 where the methodgoes to the next instruction. If it is the final instruction, line 361leads to box 362 where the funds transfer facility is exited.

[0042] It will be appreciated that an automated accounting system isshown in which a first entity and other entities with which the firstentity enters into financial transactions are in a connected network.Access is provided to the electronically recorded financial transactionsfor agents of the first entity, such as accountants. These agents canperform activities such as entering, deleting, reviewing, adjusting andprocessing data inputs. In addition, accounting reports can be generatedand a funds transfer facility is provided.

[0043] While specific embodiments of the invention have been disclosed,it will be appreciated by those skilled in the art that variousmodifications and alterations to those details could be developed inlight of the overall teachings of the disclosure. Accordingly, theparticular arrangements disclosed are meant to be illustrative only andnot limiting as to the scope of the invention which is to be given thefull breadth of the appended claims and any and all equivalents thereof.

What is claimed is:
 1. A method of providing an automated accountingsystem for a first entity such as an individual or a business, saidmethod comprising: establishing at least one file for said first entity;providing a plurality of data inputs to said file, said data inputsincluding electronically recorded financial transactions made betweensaid first entity and other entities; and providing access to said filefor agents of said first entity so that one of said agents can performone or more activities selected from the group consisting of entering,deleting, reviewing, adjusting, and processing said data inputs.
 2. Themethod of claim 1, including entering into said file informationregarding said first entity.
 3. The method of claim 2, wherein saidinformation includes beginning balances for income, expenses, assets,liabilities, bank accounts and the like.
 4. The method of claim 3,including entering into said file coding information appropriate to saidfirst entity.
 5. The method of claim 1, including providing said firstentity and said agents a passcode to permit access to said file.
 6. Themethod of claim 1, including providing a subsidiary ledger for each ofsaid other entities; and transferring selected subsidiary ledgers fromsaid other entities to said file.
 7. The method of claim 6, includingproviding access to said subsidiary ledger for agents of said firstentity, whereby said agent can perform one or more activities selectedfrom the group consisting of entering, deleting, reviewing, adjustingand processing said data inputs in said selected subsidiary ledgers. 8.The method of claim 1, including coding said data inputs.
 9. The methodof claim 8, including coding said data inputs before said data inputsare provided to said file.
 10. The method of claim 8, including codingsaid data inputs when said financial transaction is recorded.
 11. Themethod of claim 8, including coding said data inputs after said datainputs are provided to said file.
 12. The method of claim 8, includingchanging said coding of said data inputs after said data input has beencoded and provided to said file.
 13. The method of claim 8, includingsaid coding comprises entering accounting codes and financialtransaction codes into said file.
 14. The method of claim 1, includingproviding a funds transfer facility to facilitate transfer of funds toand from said first entity and other entities.
 15. The method of claim14, including employing said funds transfer facility to receive aninstruction to transfer funds; and transferring funds from said firstentity to said other entity based on said instruction.
 16. The method ofclaim 14, including employing said funds transfer facility to transmitdata related to said transfer of funds.
 17. The method of claim 14,including employing said funds transfer facility to adjust currentrecords.
 18. The method of claim 14, including employing said fundstransfer facility to adjust future action.
 19. The method of claim 1,including employing said data inputs to generate at least one accountingstatement.
 20. The method of claim 19, including providing saidaccounting statements to said first entity.
 21. An automated accountingsystem for a first entity such as an individual or a business, saidsystem comprising: a first computer having at least one file; a secondcomputer for receiving data inputs, said data inputs includingelectronically recorded financial transactions made between said firstentity and a second entity; first communication means for transferringsaid data inputs from said second computer to said file of said firstcomputer; and means for providing access to said file of said firstcomputer for agents of said first entity so that one of said agents canperform one or more activities selected from the group consisting ofentering, deleting, reviewing, adjusting and processing said datainputs.
 22. The system of claim 21, wherein said first computer hasmeans for generating at least one accounting report from said datainputs.
 23. The system of claim 21, including a first said file in saidfirst computer for receiving accrual accounting data inputs; and asecond said file in said first computer for receiving cash accountingdata inputs.
 24. The system of claim 21, including means fortransferring funds from said first entity to said second entity.
 25. Thesystem of claim 21, including said second computer has means forelectronically recording, collecting, processing, storing andtransmitting said financial transactions.
 26. The system of claim 21,including said first computer is a personal computer or a telephonecomputer.
 27. The system of claim 21, including said second computer isa personal computer.